FAVOURED ACCESS

Should Prime Minister Patrick Manning succeed in his quest for Most Favoured Nation Status for specific Trinidad and Tobago exports to the United States, namely petroleum, iron, steel and aluminium products, this is certain to result in increased access of these items to the US market. Should Most Favoured Nation Status be accorded to Trinidad and Tobago in the areas requested by Prime Minister Manning, this will mean that the lowest duty granted to similar items exported by any one country or other countries to the United States will be applied to these products. While it may not achieve the duty free access accorded a defined range of our exports as exists today under the Caribbean Basin Initiative (CBI), it will nonetheless give this country’s iron and steel products, for example, a competitive edge over iron and steel exports to the United States.  Additionally, it will see Trinidad and Tobago’s steel landing in the US at far lower prices than steel imports from the European Union.

In turn, a Most Favoured Nation Status for our steel will mean the end of countervailing duties for this product imposed in the late 1980s, when the then United States Administration charged that this country’s steel was being subsidised by the Trinidad and Tobago Government and had applied punitive additional duties, which it had advanced counter balanced the reported subsidies. Interestingly, the granting of any MFN status will mean that Trinidad and Tobago steel, manufactured by Caribbean Ispat Limited (CIL), will be offloaded in the United States and be able to access domestic markets there at appreciably lower and ipso facto more competitive prices, than steel exports of CIL’s head company and sister companies, for example Germany’s Hamburg Steel Works. The Hamburg Steel Works together with an Austrian steel major, Voest Alpine, had managed the then ISCOTT under contract in 1980s. And with the ever present need of the US market to be competitive it should see increased sales of Caribbean Ispat Steel there. Ironically, should Caribbean Ispat adopt a pragmatic approach with respect to the optimising of returns and concentrate largely on exports to the United States this will have a negative impact on the downstream steel industry in Trinidad and Tobago. This will conceivably either lead to a loss of jobs, or to this country which is one of the Region’s largest steel producers having to import steel if the downstream industry is to survive.

Inevitably, the new equation in steel will mean a rise in the cost of steel here, at present difficult to quantify.  On the plus side, however, should the Most Favoured Nation Status apply to petroleum it will result in an increased United States market, allowing oil companies, what with the recently discovered higher levels of reserves, to produce more. One of the beneficiaries will be State owned Petroleum Company of Trinidad and Tobago Limited (Petrotrin), with another being Government revenue, what with the corresponding rise in State income from duties and taxes re the oil industry, leading to an overall plus for this country. All of the above, the pluses and the minuses, will still have to await the decision on the United States Government as to whether it will view favourably this country’s renewed plea for Most Favoured Nation Status vis a vis the petroleum, iron, steel and what have you.